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Europe’s failed response to refugee crisis risks fraying local labor markets

There’s no end in sight to the wave of refugees seeking solace in Europe. Reuters

Europe’s failed response to refugee crisis risks fraying local labor markets

Europe’s refugee crisis neither began nor ended when the body of a Kurdish boy was found washed up on a Turkish beach in September.

In all, he was just one of 3,770 people who lost their lives in 2015 as over a million people crossed into Europe fleeing wars in Syria, Afghanistan and elsewhere. Some are forecasting that many millions more will try their luck in 2016 and beyond, as the conflicts prompting this exodus offer no end in sight.

Doctors Without Borders this week called the response of European governments a “catastrophic failure,” pointedly summing up how countries’ “capricious” policies of opening and closing borders created “senseless stress and hazardous conditions of passage.”

As this crisis continues to unfold and countries in Europe reevaluate how to manage its challenges, it is essential that we take time to appreciate the broader context of the problem and some of the issues that have been neglected, specifically the negative effects on labor markets.

As specialized researchers in the fields of illicit flows, cross-border crime, corruption and development, our objective was to highlight how mismanaging the integration of refugees into local labor markets will not only harm the migrant themselves but could also imperil the system that has allowed our wealth and rights to flourish since World War II.

A man holds a placard with a photograph of three-year-old Syrian refugee boy Aylan Kurdi who died in September trying to reach Greece from Turkey. Reuters

Abandoning one’s land

A lot has been written about the causes of this exodus out of the Middle East, but it is worth remembering that the migrants are generally fleeing disasters caused or prolonged by Western policies. They are not leaving their homes by choice, despite what some U.S. and European politicians claim.

People do not massively abandon their land, possessions and loved ones for a dangerous and uncertain passage to a foreign country that may or may not be welcoming newcomers for no good reason.

And the causes go far deeper than the civil war in Syria. Sociopolitical, economic and power asymmetries, such as lack of security and stability, inequalities and threats to livelihoods, underlie the massive flight from misery, starvation, massacres and insecurity that the West has either caused or done little to alleviate.

Lawful but awful business practices have been producing financial, environmental, health and security disasters for decades. Interventions in Afghanistan, Iraq, Syria, Egypt, Libya and Somalia and a lack of progress in resolving the Kurdish and Palestinian plights have fueled the human flows and constitute negative “externalities” of U.S. and European foreign policies.

The refugee crisis, arguably, is simply a result of the consequences of our own policy failures returning to our doorstep.

Many cities in Syria are now in ruins, such as these neighborhoods in Homs. Reuters

European integration at risk

While the plight of the refugees is desperate, the consequences of the crisis are also dire for some of the most significant achievements of European integration: open borders, social welfare and human rights.

This was true before the current media frenzy about migrant participation in sexual assaults and other crimes in Germany, Austria and elsewhere, but these recent events have darkened the atmosphere and given a further boost to xenophobic reactions.

They have also affected the functioning of European labor markets in ways that have been poorly understood. Understanding these effects are the main issues we wish to address here because welfare, peace, human rights and open borders all depend on the capacity of governments to generate wealth through work and production.

Thriving black markets

As soon as refugees and other migrants pass through Greece – a typical entry point into Europe – they seek jobs whether they have a work permit or not. They have to earn something in order to take care of their families and themselves.

This vulnerability creates opportunities for employers in a saturated market to take advantage of them, pay low salaries (or even no salary at all), offer no benefits and demand long hours. In some cases, they seize migrant passports and exploit their illegal status to deprive them of justice and basic rights.

The impacts are felt by everyone, not just those being exploited. Governments collect less tax revenue, while locals lose jobs, and not just the low-paying ones. The wave of migrants includes many well-educated and skilled workers, so tensions and frustrations with local labor may grow into other parts of the economy.

In this tense environment, the usual labor framework breaks down as neither migrants nor employers go by the book, leading to a thriving black market in which tax, welfare and labor rules are broken routinely. Unfortunately there are very poor studies on black market labor in the EU and the relationship between international migration and labor market suffer from a lack of studies or interest, mostly because the topic is a politically difficult one.

In any case, the vast and growing network of migrant smugglers is making matters worse, pushing more refugees into crime or forced servitude as the only solution to their personal crises. This in turn reinforces stereotypes and adds fuel to the racist and xenophobic flames.

These problems are drastically transforming Europe in terms of governance, social integration, security and labor. And this is only the beginning as some expect many millions more refugees to flow northward in the near future.

Furthermore, fears that terrorists are using the refugee flows as cover to sneak into Europe to commit atrocities are shaking the foundations of European integration and the agreements over free movement at the core of the EU project.

The refugees themselves are driven by the universal need for dignity, education, work and a secure future for their families. Classifying their efforts to work as illegal only worsens the problem by depressing salaries and leading to more criminality

Finding a way to integrate these refugees into labor markets is not only the charitable thing to do: it’s also essential to preserving the European Union and its values.

A child holds up a placard reading ‘Afghan refugees condemn the crimes on the New Year’s Eve’ a few weeks after mass sexual assaults took place in Cologne, Germany. Reuters

Politicians and unions drop the ball

Unfortunately, official responses in Europe do exactly the opposite of what is required. As for worker representatives and unions , they are largely silent or inert.

Blocking “flows” when it comes to humans desperately abandoning wreckages at home have far more adverse consequences than positive effects.

Countries in Europe are failing to meet their obligations for crisis management, raising walls and blocking borders, shooting at refugees and even depriving them of assets over US$1,000.

Efforts to crack down on the black labor markets – primarily by building costly walls, barbed wire and criminal justice measures – have been counterproductive so far and only incentivize organized crime and create deeper and more sophisticated shadow economies. In other words, creating a “fortress Europe” will not work.

As for unions, and especially the International Trade Union Confederation (ITUC), one might expect them to be concerned about the erosion of labor market integrity and the rights of workers (local and foreign), something mandated by the International Labor Organization . Yet their silence on this issue has been deafening.

A systematic review of national and international unions shows that very few of them have taken a strong position on migrant labor or engaged in any concrete initiatives. Some stand accused of inertia and for looking out for their self-interests. A notable exception is the European Trade Union Council, which aims to speak with a single voice on behalf of Europe’s workers and publishes a lot more than others on migration.

Even there, however, the serious effects of the crisis are insufficiently discussed and no innovative solutions are proposed. Instead, the emphasis is on putting pressure on European leaders to adopt common and sustainable approaches with regard to management and the respect of human dignity.

A better approach

There are few (if any) perfect solutions, but better approaches that respect the dignity of refugees while benefiting Europe do exist.

Christina Boswell and Thomas Straubhaar of the Hamburg Institute of International Economics, for example, suggest considering the following steps:

  • expand legal entry programs to minimize the illegal entry and its consequences

  • regularization of those already in the country for similar reasons

  • financial incentives to business so that they employ legal workers

  • appropriate employer sanctions for labor violations

  • toleration and management (rather than prohibition) of unofficial and unrecorded labor practices.

The goal for disaster-fleeing populations is for them to thrive, not just survive. This can constitute in fact also self-help for aging countries and weak economies that may benefit from the injection of energetic, eager and diversely skilled workers.

Meanwhile, unions could do more to help by focusing on the defense and improvement of all workers’ conditions and rights. The migrants themselves are especially in need of information about what rights they do have, status so they are not easy prey for criminal enterprises and collective action to fight for services on their behalf.

So even if the U.S. and Europe cannot welcome all of the misery in the world – as French Socialist Michel Rocard put it – we should do our part to help alleviate it.